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AN ACT
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relating to the regulation of certain persons involved in mortgage |
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lending. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 156.002(10), Finance Code, is amended to |
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read as follows: |
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(10) "Mortgage loan" means a debt against real estate |
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secured by a [first-lien] security interest against one-to-four |
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family residential real estate created by a deed of trust, security |
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deed, or other security instrument. |
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SECTION 2. Section 156.201(b), Finance Code, is amended to |
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read as follows: |
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(b) An individual may not act or attempt to act as a loan |
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officer unless the individual at the time is: |
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(1) licensed under this chapter and [;
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[(2)] sponsored by a licensed mortgage broker and |
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acting for the mortgage broker; or |
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(2) [(3)] exempt under Section 156.202. |
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SECTION 3. Subchapter C, Chapter 156, Finance Code, is |
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amended by adding Section 156.2011 to read as follows: |
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Sec. 156.2011. PROVISIONAL LOAN OFFICER LICENSE. (a) An |
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applicant for a loan officer license may be issued a provisional |
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loan officer license as provided by this section only if the |
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applicant: |
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(1) during the 20 months immediately preceding the |
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application, has at least 18 months of experience as a loan officer |
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employed by a person exempt from this chapter under Section |
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156.202; and |
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(2) meets the qualifications for a loan officer |
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license, other than the educational and examination requirements. |
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(b) The commissioner shall use best efforts to issue the |
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provisional loan officer license on or before the later of: |
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(1) the 10th business day after the date of receipt of |
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a completed application; or |
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(2) the second business day after the date of receipt |
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of the criminal background information required under Section |
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156.206 demonstrating that the applicant has no pending criminal |
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charges and has not been convicted of a criminal offense. |
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(c) For purposes of Subsection (b)(2), a person is |
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considered convicted as provided by Section 156.204(d). |
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(d) A provisional loan officer license is valid for 90 days |
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after the date the license is issued, except as provided by |
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Subsection (e). |
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(e) The commissioner may revoke a provisional loan officer |
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license if the commissioner discovers that the applicant has made a |
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misrepresentation relating to the applicant's qualifications for a |
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loan officer license, has violated this chapter, or does not meet |
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the qualifications for a provisional loan officer license. The |
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revocation of a provisional loan officer license is not subject to |
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appeal. |
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(f) The finance commission by rule may impose a fee not to |
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exceed $100 for an expedited issuance of a provisional loan officer |
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license. The fee is nonrefundable and is in addition to the fee for |
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the application for a regular loan officer license. |
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SECTION 4. Section 156.202, Finance Code, is amended to |
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read as follows: |
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Sec. 156.202. EXEMPTIONS. This chapter does not apply to: |
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(1) any of the following entities or an employee of any |
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of the following entities provided the employee is acting for the |
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benefit of the employer: |
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(A) a bank, savings bank, or savings and loan |
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association, or a subsidiary or an affiliate of a bank, savings |
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bank, or savings and loan association; |
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(B) a state or federal credit union, or a |
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subsidiary, affiliate, or credit union service organization of a |
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state or federal credit union; |
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(C) an insurance company licensed or authorized |
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to do business in this state under the Insurance Code; |
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(D) a mortgage banker registered under Chapter |
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157; |
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(E) an organization that qualifies for an |
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exemption from state franchise and sales tax as a 501(c)(3) |
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organization; |
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(F) a Farm Credit System institution; or |
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(G) a political subdivision of this state |
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involved in affordable home ownership programs; |
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(2) an individual who makes a mortgage loan from the |
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individual's own funds to a spouse, former spouse, or persons in the |
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lineal line of consanguinity of the individual lending the money; |
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(3) an owner of real property who in any |
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12-consecutive-month period makes no more than five [makes a] |
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mortgage loans [loan] to purchasers [a purchaser] of the property |
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for all or part of the purchase price of the real estate against |
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which the mortgage is secured; or |
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(4) an individual who: |
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(A) makes a mortgage loan from the individual's |
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own funds; |
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(B) is not an authorized lender under Chapter |
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342, Finance Code; and |
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(C) does not regularly engage in the business of |
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making or brokering mortgage loans. |
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SECTION 5. Section 156.203(c), Finance Code, is amended to |
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read as follows: |
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(c) An application for a loan officer license must be |
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accompanied by: |
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(1) an application fee in an amount determined by the |
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commissioner not to exceed $275 [$175]; and |
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(2) a recovery fund fee as provided by Section |
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156.502. |
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SECTION 6. Sections 156.204(a), (b), (c), and (e), Finance |
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Code, are amended to read as follows: |
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(a) To be eligible to be licensed as a mortgage broker as an |
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individual, the individual [a person] must: |
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(1) be [an individual who is] at least 18 years of age; |
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(2) be a citizen of the United States or a lawfully |
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admitted alien; |
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(3) maintain a physical office in this state and |
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designate that office in the application; |
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(4) provide the commissioner with satisfactory |
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evidence that the applicant satisfies one of the following: |
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(A) the person has received a bachelor's degree |
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in an area relating to finance, banking, or business administration |
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from an accredited college or university and has 18 months of |
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experience in the mortgage or lending field as evidenced by |
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documentary proof of full-time employment as a mortgage broker or |
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licensed loan officer with a mortgage broker or a person exempt |
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under Section 156.202; |
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(B) the person is licensed in this state as: |
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(i) an active real estate broker under |
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Chapter 1101, Occupations Code; |
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(ii) an active attorney; or |
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(iii) a local recording agent or insurance |
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solicitor or agent for a legal reserve life insurance company under |
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Chapter 21, Insurance Code, or holds an equivalent license under |
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Chapter 21, Insurance Code; or |
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(C) the person has three years of experience in |
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the mortgage lending field as evidenced by documentary proof of |
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full-time employment as a licensed loan officer with a mortgage |
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broker or a person exempt under Section 156.202; |
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(5) provide the commissioner with satisfactory |
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evidence of: |
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(A) having passed an examination, offered by a |
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testing service or company approved by the finance commission, that |
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demonstrates knowledge of: |
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(i) the mortgage industry; and |
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(ii) the role and responsibilities of a |
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mortgage broker; and |
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(B) compliance with the financial requirements |
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of this chapter; |
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(6) not have been convicted of a criminal offense that |
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the commissioner determines directly relates to the occupation of a |
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mortgage broker as provided by Chapter 53, Occupations Code; |
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(7) satisfy the commissioner as to the individual's |
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good moral character, including the individual's honesty, |
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trustworthiness, and integrity; [and] |
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(8) not be in violation of this chapter, a rule adopted |
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under this chapter, or any order previously issued to the |
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individual by the commissioner; and |
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(9) provide the commissioner with satisfactory |
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evidence that: |
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(A) if the person has not been previously |
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licensed as a mortgage broker or a loan officer under this |
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subchapter, the person has completed 90 classroom hours of |
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education courses approved by the commissioner under this section; |
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or |
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(B) if the person has not been previously |
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licensed as a mortgage broker under this subchapter but has been |
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licensed as a loan officer under this subchapter, the person has |
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successfully completed an additional 30 classroom hours of |
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education courses approved by the commissioner under this section. |
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(b) A corporation, limited liability company, or limited |
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partnership may not act as a mortgage broker unless the entity |
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obtains a mortgage broker license. To be eligible for a mortgage |
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broker license the entity must designate an individual licensed as |
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a mortgage broker as its designated representative and pay an |
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application fee in an amount to be determined by the commissioner |
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not to exceed $175. The designated representative must be: |
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(1) if the entity is a corporation, an officer of the |
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corporation; |
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(2) if the entity is a limited liability company, a |
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manager of the limited liability company; or |
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(3) if the entity is a limited partnership: |
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(A) an individual who is a general partner; |
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(B) an officer of a general partner that is a |
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corporation; or |
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(C) a manager of a general partner that is a |
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limited liability company. [A mortgage broker may conduct business
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under a corporate structure, partnership, or any other business
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form or as an independent contractor for a corporation,
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partnership, or any other business entity. Before conducting
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mortgage broker activities under, through, or for a corporation,
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partnership, or other business entity, a mortgage broker must
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notify the commissioner, in writing, of any corporate name,
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partnership name, assumed name, or any other name under, through,
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or for which the mortgage broker conducts activities for which a
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license is required under this chapter. The corporation,
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partnership, or other business entity under, through, or for which
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the mortgage broker conducts business is not required to be
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separately licensed as a mortgage broker provided that all
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individuals who perform mortgage broker activities are licensed as
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mortgage brokers or loan officers. The commissioner shall require
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proof of compliance with this subsection at the time the mortgage
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broker applies for and renews a license.] |
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(c) To be eligible to be licensed as a loan officer a person |
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must: |
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(1) be an individual who is at least 18 years of age; |
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(2) be a citizen of the United States or a lawfully |
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admitted alien; |
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(3) designate in the application the name of the |
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mortgage broker sponsoring the loan officer; |
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(4) provide the commissioner with satisfactory |
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evidence that the applicant satisfies one of the following: |
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(A) the person meets one of the requirements |
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described by Subsection (a)(4) and has [;
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[(B) the person has] successfully completed 60 |
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classroom [30] hours of education courses approved by the |
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commissioner under this section; |
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(B) [(C)] the person has 18 months of experience |
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as a loan officer as evidenced by documentary proof of full-time |
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employment as a loan officer with [a mortgage broker or] a person |
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exempt under Section 156.202 and has successfully completed 30 |
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classroom hours of education courses approved by the commissioner |
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under this section; or |
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(C) [(D)] for applications received prior to |
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January 1, 2000, the mortgage broker that will sponsor the |
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applicant provides a certification under oath that the applicant |
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has been provided necessary and appropriate education and training |
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regarding all applicable state and federal law and regulations |
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relating to mortgage loans; |
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(5) not have been convicted of a criminal offense that |
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the commissioner determines directly relates to the occupation of a |
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loan officer as provided by Chapter 53, Occupations Code; |
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(6) satisfy the commissioner as to the individual's |
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good moral character, including the individual's honesty, |
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trustworthiness, and integrity; |
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(7) provide the commissioner with satisfactory |
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evidence of having passed an examination, offered by a testing |
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service or company approved by the finance commission, that |
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demonstrates knowledge of: |
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(A) the mortgage industry; and |
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(B) the role and responsibilities of a loan |
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officer; and |
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(8) not be in violation of this chapter, a rule adopted |
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under this chapter, or any order previously issued to the |
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individual by the commissioner. |
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(e) The education courses required for a mortgage broker or |
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loan officer license under Subsection (a)(9) or (c)(4) [(c)(4)(B)] |
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must cover ethics, the Real Estate Settlement Procedures Act of |
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1974 (12 U.S.C. Section 2601 et seq.), the Truth in Lending Act (15 |
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U.S.C. Section 1601 et seq.), the Equal Credit Opportunity Act (15 |
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U.S.C. Section 1691 et seq.), and the provisions of this chapter. |
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SECTION 7. Section 156.208(i), Finance Code, as added by |
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Chapter 1018, Acts of the 79th Legislature, Regular Session, 2005, |
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is relettered as Subsection (j), Section 156.208, Finance Code, and |
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amended to read as follows: |
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(j) [(i)] The commissioner may deny the renewal of a |
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mortgage broker license or a loan officer license if: |
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(1) the mortgage broker or loan officer is in |
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violation of this chapter, a rule adopted under this chapter, or any |
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order previously issued to the individual by the commissioner; [or] |
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(2) the mortgage broker or loan officer is in default |
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in the payment of any administrative penalty, fee, charge, or other |
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indebtedness owed under this title; or |
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(3) during the current term of the license, the |
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commissioner becomes aware of any fact that would have been grounds |
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for denial of an original license if the fact had been known by the |
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commissioner on the date the license was granted. |
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SECTION 8. Section 156.211, Finance Code, is amended by |
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adding Subsections (b-1), (b-2), and (b-3) to read as follows: |
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(b-1) Not later than the 10th day before a mortgage broker |
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begins doing business under an assumed name, the mortgage broker |
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shall file with the commissioner a copy of an assumed name |
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certificate for each assumed name under which the mortgage broker |
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intends to conduct business and pay a $25 registration fee for each |
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assumed name. A loan officer may not conduct business under any |
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assumed name that is not the registered assumed name of the |
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sponsoring mortgage broker. |
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(b-2) A person licensed under this chapter must notify the |
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commissioner not later than the 10th day after the date of any |
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change of the person's name and pay to the commissioner a change of |
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name fee of $25 for the issuance of an amended license certificate. |
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(b-3) A business entity licensed under this chapter shall |
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notify the commissioner of any change of its designated |
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representative. The commissioner may charge a fee of $25 for each |
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change of a designated representative. |
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SECTION 9. Subchapter C, Chapter 156, Finance Code, is |
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amended by adding Section 156.214 to read as follows: |
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Sec. 156.214. APPROVAL OF COURSES. (a) The finance |
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commission may adopt rules establishing: |
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(1) minimum standards for courses, approved course |
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providers, and approved course instructors; and |
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(2) a fee not to exceed $200 for the review and |
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approval of each course not provided and approved by a duly |
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organized trade association the purpose of which is primarily to |
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represent residential mortgage originators. |
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(b) An approval is for up to two years. |
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SECTION 10. Section 156.303, Finance Code, is amended by |
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amending Subsection (a) and adding Subsection (j) to read as |
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follows: |
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(a) The commissioner may order disciplinary action against |
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a licensed mortgage broker or a licensed loan officer when the |
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commissioner, after a hearing, has determined that the person: |
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(1) obtained a license, including a renewal of a |
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license, under this chapter through a false or fraudulent |
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representation or made a material misrepresentation in an |
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application for a license or for the renewal of a license under this |
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chapter; |
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(2) published or caused to be published an |
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advertisement related to the business of a mortgage broker or loan |
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officer that: |
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(A) is misleading; |
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(B) is likely to deceive the public; |
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(C) in any manner tends to create a misleading |
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impression; |
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(D) fails to identify as a mortgage broker or |
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loan officer the person causing the advertisement to be published; |
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or |
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(E) violates federal or state law; |
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(3) while performing an act for which a license under |
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this chapter is required, engaged in conduct that constitutes |
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improper, fraudulent, or dishonest dealings; |
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(4) entered a plea of guilty or nolo contendere to, or |
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is convicted of, a criminal offense that is a felony or that |
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involves fraud or moral turpitude in a court of this or another |
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state or in a federal court; |
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(5) failed to use a fee collected in advance of closing |
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of a mortgage loan for a purpose for which the fee was paid; |
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(6) charged or received, directly or indirectly, a fee |
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for assisting a mortgage applicant in obtaining a mortgage loan |
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before all of the services that the person agreed to perform for the |
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mortgage applicant are completed, and the proceeds of the mortgage |
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loan have been disbursed to or on behalf of the mortgage applicant, |
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except as provided by Section 156.304; |
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(7) failed within a reasonable time to honor a check |
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issued to the commissioner after the commissioner has mailed a |
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request for payment by certified mail to the person's last known |
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business address as reflected by the commissioner's records; |
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(8) paid compensation to a person who is not licensed |
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or exempt under this chapter for acts for which a license under this |
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chapter is required; |
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(9) induced or attempted to induce a party to a |
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contract to breach the contract so the person may make a mortgage |
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loan; |
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(10) published or circulated an unjustified or |
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unwarranted threat of legal proceedings in matters related to the |
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person's actions or services as a mortgage broker or loan officer, |
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as applicable; |
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(11) established an association, by employment or |
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otherwise, with a person not licensed or exempt under this chapter |
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who was expected or required to act as a mortgage broker or loan |
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officer; |
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(12) aided, abetted, or conspired with a person to |
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circumvent the requirements of this chapter; |
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(13) acted in the dual capacity of a mortgage broker or |
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loan officer and real estate broker, salesperson, or attorney in a |
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transaction without the knowledge and written consent of the |
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mortgage applicant or in violation of applicable requirements under |
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federal law; |
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(14) discriminated against a prospective borrower on |
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the basis of race, color, religion, sex, national origin, ancestry, |
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familial status, or a disability; |
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(15) failed or refused on demand to: |
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(A) produce a document, book, or record |
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concerning a mortgage loan transaction conducted by the mortgage |
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broker or loan officer for inspection by the commissioner or the |
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commissioner's authorized personnel or representative; |
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(B) give the commissioner or the commissioner's |
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authorized personnel or representative free access to the books or |
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records relating to the person's business kept by an officer, |
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agent, or employee of the person or any business entity through |
|
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which the person conducts mortgage brokerage activities, including |
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a subsidiary or holding company affiliate; or |
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(C) provide information requested by the |
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commissioner as a result of a formal or informal complaint made to |
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the commissioner; |
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(16) failed without just cause to surrender, on |
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demand, a copy of a document or other instrument coming into the |
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person's possession that was provided to the person by another |
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person making the demand or that the person making the demand is |
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under law entitled to receive; [or] |
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(17) disregarded or violated this chapter, a rule |
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adopted by the finance commission under this chapter, or an order |
|
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issued by the commissioner under this chapter; or |
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(18) provided false information to the commissioner |
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during the course of an investigation or inspection. |
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(j) On notice and opportunity for hearing, the commissioner |
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may suspend a person's license under this chapter if an indictment |
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or information is filed or returned alleging that the person |
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committed a criminal offense involving fraud, theft, or dishonesty. |
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The suspension continues until the criminal case is dismissed or |
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the person is acquitted. |
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SECTION 11. The heading of Section 341.103, Finance Code, |
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is amended to read as follows: |
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Sec. 341.103. REGULATION OF SAVINGS INSTITUTIONS AND |
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LICENSED MORTGAGE BROKERS AND LOAN OFFICERS [ASSOCIATIONS]. |
|
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SECTION 12. Section 341.103(a), Finance Code, is amended to |
|
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read as follows: |
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(a) The savings and mortgage lending [loan] commissioner |
|
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shall enforce this subtitle relating to the regulation of: |
|
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(1) state savings associations operating under this |
|
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subtitle; |
|
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(2) state savings banks operating under this subtitle; |
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and |
|
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(3) persons licensed under Chapter 156. |
|
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SECTION 13. Section 342.051, Finance Code, is amended by |
|
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adding Subsection (f) to read as follows: |
|
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(f) A mortgage broker licensed under Chapter 156 is not |
|
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required to obtain a license under this chapter to make, negotiate, |
|
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or transact a mortgage loan, as defined by Chapter 156. |
|
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SECTION 14. The changes in law made by Section 156.2011, |
|
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Finance Code, as added by this Act, and Section 156.204, Finance |
|
|
Code, as amended by this Act, apply only to a loan officer or |
|
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mortgage broker license for which any part of an application is |
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submitted on or after September 1, 2007. |
|
|
SECTION 15. A corporation, limited liability company, or |
|
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limited partnership is not required to obtain a mortgage broker |
|
|
license, as required by Section 156.204(b), Finance Code, as |
|
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amended by this Act, to act as a mortgage broker before January 1, |
|
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2008. |
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SECTION 16. This Act takes effect September 1, 2007. |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2783 was passed by the House on May 4, |
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2007, by the following vote: Yeas 138, Nays 0, 1 present, not |
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voting; and that the House concurred in Senate amendments to H.B. |
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No. 2783 on May 25, 2007, by the following vote: Yeas 133, Nays 0, |
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2 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2783 was passed by the Senate, with |
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amendments, on May 22, 2007, by the following vote: Yeas 31, Nays |
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0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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Governor |